WLF: NAIC’s Climate Risk Survey Promotes Activists’ Agendas

Insurance commissioners may not be warm to the issue of greater transparency and more stringent disclosure of insurance information related to climate changes, according to a briefing published by the Washington Legal Foundation (WLF).

A set of rules recently adopted by the National Association of Insurance Commissioners (NAIC) requires insurance companies to disclose information related to climate change, which, the WLF says, serves mainly to promote the ideological objectives of global warming activists.

The paper, “Mandated ‘Climate Risk’ Disclosure: Turning Professional Activists into Insurance Inspectors,” written by Robert Detlefsen, VP of public policy for the National Association of Mutual Insurance Companies (NAMIC), examines the potential impact of the NAIC’s recently adopted “Insurer Climate Risk Disclosure Survey,” which requires all insurers with annual premium of more than $300 million to submit the completed survey to the insurance department of the state in which they are domiciled beginning in May 2010.

The NAIC says the survey’s eight questions appear to be derived from a set of insurer best practices promulgated by Ceres, an activist group that helped draft the survey and lobbied strenuously for its adoption.

The survey, Detlefsen writes, “requires much more than a straightforward disclosure of discrete, identifiable risks. By demanding that insurers disclose actions they are taking in response to their understanding of ‘climate change risks,’ the survey implies that insurers ought to take concrete action in response to risks they may not understand. It could be argued that insurance policyholders and the public interest would be better served if insurers refrained from taking action in response to things they don’t understand.”

Detlefsen cites leading climate scientists who contend that the links between global warming and specific weather-related perils, such as hurricanes, are still uncertain. “Even if the insurance risks stemming from global warming were fully understood, it is far from clear which actions available to insurers would actually be effective in combating global warming,” he writes.

While the NAIC’s “Insurer Climate Risk Disclosure Survey” may appear benign because of its emphasis on “mere disclosure,” Detlefsen warns of the harmful consequences that could ensue from implicitly coercing insurers into pursuing an agenda that conforms to the policy predilections of groups such as Ceres.

Though the NAIC has instructed insurers to file the survey with the insurance department of their domiciliary state, Detlefsen notes that “the decision as to whether this requirement will be enforced ultimately rests with each state insurance department.”

The WLF has mailed copies of the paper to all 57 U.S. insurance commissioners.